Analysis & Opinion

NAIROBI Feb 12 (Reuters) - Kenyan energy officials said on
Tuesday the country was demarcating up to nine new blocks of
onshore and offshore territory for the auction of licences for
oil and gas exploration.

The new licensing round will introduce an auction-style
format to licensing blocks in Kenya, Permanent Secretary for
Energy Patrick Nyoike told reporters at an event hosted by
Africa Oil Corp.

Previously Kenya operated more on a first-come, first-serve
basis, but since it has become established as a known area for
hydrocarbon deposits, it wants to demand more from companies
that seek to drill in the country, energy ministry officials
said.

Nyoike said Kenya would demand higher licensing fees and
impose heavier work programme requirements, which means
companies would be required to spend more money in the country.

"Things were different a year ago than now ... Kenya can
demand more," Nyoike said.

The new area is expected to become available within a month,
he said.

Kenya has become a magnet for exploration activity since
announcing in March last year its first oil discovery by British
explorer Tullow Oil to the north, followed shortly by a
second find in the same region.

In the wake of those finds, international oil and gas
companies snapped up what remained of Kenya's 46 exploration
licenses.

Kenya's production-sharing contracts dictate, however, that
explorers must relinquish 25 percent of the acreage in a
licensed territory every two years. Tullow Oil and New
York-listed Anadarko Petroleum both reached that point
on a total of seven exploration blocks late last year.

The Ministry of Energy reclaimed the territory, which it is
now in the process of demarcating into as many as nine new
blocks for licensing.

Among the area available will be part of the Lokichar Basin,
where Tullow made both its oil finds, and the Lamu Basin, where
Apache made a gas find.

"Many, many companies have shown interest in coming to Kenya
... Chevron and Eni want more blocks," Nyoike
said.